Jeremy Hunt: Challenges faced by parents and childcare sector due to fiscal plans

Date Posted: Friday 18th November 2022

Dear Chancellor,

We are writing to you as a group of charities, organisations and campaigners to ask that you consider the additional challenges faced by parents and the childcare sector due to fiscal plans set out in your Autumn Statement. We agree wholeheartedly with your statement that “to be pro-education is to be pro-growth” which is why we had hoped to see a commitment to children’s education before the age of 5 years old.

We have the most expensive childcare and early years education in the developed world. Yet, there was no mention of this in the Autumn Statement. According to the Women’s Budget Group there are 1.7 million women who are prevented from taking on more hours of paid work due to childcare issues. Fixing this could boost the economy by £28 billion.

We welcomed an increase to the living wage, this will make a significant difference to many. However, no additional investment to the early years sector was announced. A recent warning from the IFS stated that the early years sector will see an 8% drop in real-terms funding over the next three years. An increase to wages, the largest expense for childcare providers, will push fees up even further for parents and force more settings to close their doors.

A raise in benefits by 10.1% is very welcome, but there was no clarity provided as to whether parental leave payments will also increase by 10.1%. This is especially concerning as statutory maternity pay in the UK accounts for just 47% of the current national minimum wage whilst our paternity leave offering is the least generous in Europe. Without an increase we will continue to see families unable to use the benefit provided, and many more will start life in poverty.

We also understand that childcare tax credits (which have been frozen since 2006) are not due to rise in line with inflation, whilst childcare costs continue to increase. This further punishes working parents and means more will be unable to access childcare and early years education. This will have a damaging impact on the earning potential of mothers, in particular, and on our children. We know that 40% of educational inequality is baked in by the age of five.

Yesterday’s statement included many references to those who are economically inactive. The Governments own data from 2018 found that there were 870,000 stay at home mums who wanted to work but couldn’t due to childcare costs and availability. Increasing the national living wage, but not increasing the funding to childcare providers, and failing to increase childcare tax credits, will only see more parents become economically inactive.

We are calling on you to take urgent action to:

–  Increase the funding to childcare providers to prevent the cost to parents from increasing further and to ensure we do not lose more childcare places.
– Increase child tax credit in line with inflation
–  Increase parental leave pay in line with inflation

We look forward to hearing your response.